By Larry Schlesinger
David Di Pilla expects HMC Capital, the Macquarie-style alternative asset management platform he founded almost five years ago, will quadruple in size to $50 billion of assets under management within five years.
High on the agenda for Mr Di Pilla, a former investment banker, is to ramp up investment into private credit, private equity, digital infrastructure and renewable energy.
Mr Di Pilla – dubbed the IPO king of Australia – also flagged plans to float two businesses on the ASX, a private credit vehicle that would hold first mortgages and a data centre real estate investment trust, as HMC reported 57 per cent earnings growth over FY24.
The business was founded eight years ago as large-format retail landlord Home Consortium following the $725 million acquisition of the former Masters portfolio.
Since then, it has dramatically transformed itself into an asset-light alternatives manager after spinning off two real estate investment trusts, the convenience retail-focused HomeCo Daily Needs REIT, and healthcare and wellness fund HCW.
Mr Di Pilla made the “$50 billion over five years” prediction after HMC grew pre-tax operating earnings by 57 per cent to $129 million over FY24, and after it grew assets under management by almost a third to $12.7 billion.
On an earnings per-share basis, HMC Capital smashed its February guidance of 33¢, delivering 37¢ on the back of growth of 40 per cent.
“This is a high velocity business that’s gone from managing $1 billion of core real estate to managing $10 billion within three years,” Mr Di Pilla told The Australian Financial Review.
“As we look forward, we are aiming to replicate this success in private equity, private credit, energy transition and digital infrastructure. We believe each of these can grow to over $10 billion over the next five years.
“So we now have the foundations in place to build a $50 billion-plus platform.”
Key priorities over this financial year include doubling its newly established private credit business to $3.2 billion of assets under management, after buying non-bank lender Payton Capital in May,
Having recruited ex-Macquarie banker Matt Lancaster as chair of its private credit arm, Mr Di Pilla said HMC was exploring the potential to establish an ASX-listed first mortgage commercial real estate fund to further diversify Payton’s capital sources, and as it eyes larger corporate and asset-based “merchant banking” style deals.
Another key priority in FY25 is the launch of a $2 billion-plus fund backed by institutional investors for HMC’s big push into renewable energy infrastructure. This, after acquiring a majority stake in battery storage developer StorEnergy in July.
HMC Capital is also exploring the creation of a data centre REIT that would hold Australian and US assets. This will leverage off its ownership of US-based digital infrastructure platform StratCap, which has $700 million of assets and a $1 billion pipeline.
“There’s only one such vehicle on the ASX, NextDC,” Mr Di Pilla said.
Growth plans for its private equity business, which owns stakes in ASX-listed Lendlease, Ingenia, Sigma Healthcare (due to merge with Chemist Warehouse) and Baby Bunting include establishing an unlisted institutional platform to invest in corporate deals.
HMC Capital’s real estate arm, which accounts for 75 per cent of its asset under management base and includes the two listed REITs and two unlisted funds, is also primed for growth with the company in talks with investors on $3 billion of new unlisted fund opportunities across healthcare and last-mile logistics.
But despite growing “faster than Goodman Group” and smashing its earnings guidance, HMC shares fell over 1.6 per cent on Thursday.
Mr Di Pilla put that fall to HMC not providing earnings guidance except to say that it “was well-placed to maintain its strong operating EPS growth trajectory”.
“It’s our standard procedure at our full-year results announcement not to give earnings guidance because there are too many variables.”
But, Mr Di Pilla said, “the bread crumbs were there” for anyone to see where the business was heading.
“I am confident we will hit the same growth number this [financial] year and beat it by 10 per cent,” he told the Financial Review.
Shaun Weick, senior analyst at Wilson Asset Management, said HMC had delivered a strong result that built on its track record of delivering EPS growth north of 40 per cent.
Mr Weick also backed the company’s growth strategy. “HMC’s investment platform is leaning into what its clients demand. Data centres and energy transition [infrastructure] all have macroeconomic tailwinds, rather than things like CBD office buildings. They are going where the capital wants to go,” he said.
Licensed by Copyright Agency. You must not copy this work without permission.
